Ombudsman Conchita Carpio Morales’ allegation that Chief Justice Renato Corona has $12 million in dollar accounts will go down in Philippine history as one of the biggest and most deviously constructed deceptions ever foisted on the public.

Morales unfortunately swallowed hook, line and sinker the deeply flawed analysis of raw data made by Heidi Mendoza, whom President Aquino deep-selected to overtake five officer-levels to become deputy commissioner of the Commission on Audit.

Morales’ allegations are based on two colossal errors. One involves confusing the meanings of “transactions” and “balances”; the other exploits laymen’s ignorance of banking transactions and how these are documented.

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The first error actually was deliberate as Aquino’s operatives still had a big problem when they got raw data from the secretariat of Anti-Money Laundering Council (AMLC). These didn’t report Corona’s bank balances but merely transactions, whose average amount per transaction for deposits was only $104,737, hardly eyebrow-raising. (The AMLC report, marked “For Intelligence Purpose Only,” however, has no authorship and its entries have no source document, which opens the possibility of its tampering.)

Morales—or Mendoza—therefore had to surreptitiously misrepresent “transactions” as “balances,” to generate significant amounts. This was done by a conceptual sleight of hand.

Morales’ PowerPoint presentation states: “The amounts appearing in the tabulation are not account balances but transaction balances.” This was a devious invention of a term in order that the sum of transactions would be confused with “balances,” so that Corona would appear to have huge bank accounts. Indeed, Morales would later on drop the “transaction” adjective, referring only to “aggregations,” “balances,” or “bank accounts.”

Transactions are the withdrawals and deposits on your bank account over time. The net result of these, what’s left, is your bank balance at a given time.

To illustrate, if I have P100,000 in my bank account and lend it out at a 5-percent interest rate for a month’s use to six borrowers consecutively, my bank balance at the end of six months would be P130,000. This is the sum of my initial P100,000 plus the interest of P5,000 earned for each of the six lending transactions.

For Morales though, my bank account would be 10 times more: P1.33 million. This is her “transaction balance” for the 13 transactions—my initial deposit of P100,000 plus P600,00 (the sum of six withdrawals of P100,000 each when I lend it) plus P630,000 (the sum of six deposits of P105,000 each when I’m repaid).

This is exactly how Morales arrived at Corona’s “$12 million dollar accounts.” The table below is a snapshot of how she did this, based on Corona’s 2004 banking transactions:

DATE DEPOSIT WITHDRAWALS

April 4 390,000

May 6 390,526

May 2 100,000

May 7 100,134

Aug 4 30,000

Sept 8 30,040

Aug 18 30,000

Sept 9 30,040

“Transaction Balance”: 550,740 550,000

From this data, Morales claims that Corona’s dollar accounts for 2004 “aggregate” to $1.1 million—the sum of all deposit transactions ($550,740) and withdrawal transactions ($550,000). She does this kind of computations for the nine years 2003 to 2011, and—voila!—Corona’s bank accounts total $12 million. (Since we don’t know what the initial deposit was, determining what Corona’s balance was at end-2004 can only be a guess.)

Morales’ second colossal error is based on ignorance—a pretended one—of banking transactions and how these are documented.

Morales and the prosecution panel claimed that the fact that Corona had 82 dollar accounts indicated that the Chief Justice was trying to hide his money and may even have engaged in money laundering. In her presentation, Morales was aghast at her “significant observations”: “multiple accounts created for similar purpose!” “Circuitous fund movements”! “Deposit and withdrawal made on the same day!” Bankers have been laughing at such display of banking illiteracy.

There are 82 accounts—in nine years—since Corona or his fund manager has been active in generating as much earnings from his funds through the usual money market placements, each of which are reported as different accounts.

For example, in the table above, a 30-day placement amounting to $390,000 was made on April 4, reported in the AMLC data as another dollar account. The placement was terminated May 6, with $390,526 credited to Corona’s account—earning $526 in a month’s time. Mysterious deposits and withdrawals on the same day? These are either the usual overnight money market placements or documentation requirements on certain transactions.

So how much did Corona have in his bank accounts, and did he report this in his SALN? While only a guess, it would be the biggest and last of Corona’s banking transactions reported: $687,433.

That dollar amount is worth P29.4 million now. But in 2001 when the exchange rate was P51 to the dollar, that was equivalent to P35 million. Doesn’t that figure remind you of the P34.7 million payment by the Manila government for the Basa-Guidote property, which the Chief Justice’s better-half, Cristina Corona, received and claimed she was holding in trust, and therefore was not their asset?